What is the meaning of fiscal deficit in an economy?

A fiscal deficit occurs when a government’s total expenditures exceed its total revenues, excluding borrowing. In other words, the government spends more money than it earns through taxes and other income, requiring it to borrow funds to make up the difference. A fiscal deficit is a key indicator of a government’s financial health, and persistent deficits can lead to an accumulation of national debt. However, temporary fiscal deficits may be used to stimulate economic growth, particularly during times of recession. Economists generally monitor fiscal deficits to ensure they do not reach unsustainable levels, which could harm economic stability.